This week’s Eurozone inflation data could hit the euro

By Smart CurrencyApril 28th, 2014

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The euro had a quiet day on Friday last week as rates remained relatively static ahead of the weekend. As Italy enjoyed another bank holiday, there was little in the way of influential data released from the Eurozone, and we did not see any more of the fluctuations seen earlier in the week. The biggest data release this week is the Flash Eurozone Consumer Price Index (CPI) figures, which are due out on Wednesday morning. These figures are a key indication of inflation in the eighteen-nation bloc and, as negative interest rates and/or quantitative easing remain a real possibility, these figures have the potential to have a significant impact on the euro. After last month’s 0.5% result, forecasts are for 0.8% this month, a figure closer to the 2% target. If we see an increase, we are likely to see a degree of euro strength, whereas a result below 0.8% is likely to cause euro rates to worsen.

Outside of this, Spanish unemployment data is due out on Monday; German unemployment figures are set for Tuesday; and Spanish and Italian manufacturing data is due out on Friday. All of these have potential to cause movements in euro rates should they deviate from what is expected. We also have to keep a close eye on the situation in Ukraine as this has the potential to effect the euro more than most currencies.

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